The European Banking Authority (EBA) launched a consultation on its Guidelines on disclosure by credit institutions of information on non-performing and forborne exposures. The Guidelines specify the information related to non-performing (NPE) and forborne exposures and foreclosed assets that banks should disclose and provide uniform disclosure formats. By addressing potential asymmetries of information and providing common disclosure on the quality of banks’ assets, the Guidelines seek to foster transparency and market discipline. The consultation runs until 27 July 2018.
The Guidelines apply to credit institutions that are subject to all or part of the disclosure requirements specified in the Capital Requirements Regulation (CRR). These requirements, including the frequency of the disclosure, are applied in a proportionate manner based on the significance of the credit institution and the level of NPEs.
The Guidelines include ten disclosure templates, of which four are applicable to all credit institutions and six apply only to significant institutions with a high level of NPEs. Overall, this uniform disclosure helps provide meaningful information to market participants on credit institutions’ asset quality. In addition, for those institutions with high level of NPEs, the Guidelines help gain a better insight into the features and distribution of their problematic assets, the quality and value of their collaterals and the efficiency of their recovery function.
The content of the uniform templates included in the Guidelines has been developed in parallel with the amendments to the reporting framework on non-performing exposures, which the EBA will consult on. Although the two consultations will be run separately, the EBA will ensure consistency between the disclosure Guidelines and the amended FINREP framework.
Comments to this consultation can be sent to the EBA by clicking on the “send your comments” button on the consultation page. All contributions received will be published following the close of the consultation, unless requested otherwise. Please note that the deadline for the submission of comments is 27 July 2018.
A public hearing will take place at the EBA premises on 27 June 2018 from 10.30 to 12:30 UK time.
Legal basis and background
The EBA has developed these Guidelines in accordance with the EBA Regulation, and following the conclusions reached by the Council in July 2017 to set up an Action Plan to tackle non-performing loans (NPLs) in Europe, where the EBA was asked to contribute with a number of initiatives. In particular, the Council underlined that a comprehensive approach combining a mix of complementing policy actions, at national and European level, is needed to address the existing stock of NPLs as well as to prevent the emergence and accumulation of new NPEs on banks’ balance sheets. The enhanced disclosure requirements developed in these draft Guidelines are one of these initiatives.